UAE Reduces Penalties on VAT and Excise TAX

The failure of the Person conducting Business to keep the required documents and other information specified in the Tax Procedures Law and the Tax Law.: Reduced

10,000 for the first time. 20,000 in case of repetition.

The Taxable Person's failure to submit a registration application within the timeframe specified in the Tax Law. Reduced

10,000

Failure of the Registrant to file a deregistration application within the timeframe specified in the Tax Law. *New mechanism

1,000 in case of delay, and on the same date monthly thereafter, up to a maximum of 10,000.

The failure of the Registrant to inform the Authority regarding any situation that requires the amendment of the information about its Tax record kept by Authority. *Reduced

5,000 for the first time. 10,000 in case of repetition.

The failure of the Legal Representative of the Taxable Person to notify the Authority of its appointment as Legal Representative within the stipulated deadline, in which case the Penalties will be due from the Legal Representative’s funds.*Reduced

10,000

The Taxable Person's inability to settle the Payable Tax stated in the submitted Tax Return or Voluntary Disclosure, or the Tax Assessment he was notified of, within the timeframe specified in the Tax Law.*New mechanism

1. The Taxable Person shall be obliged to pay the penalty applicable to late payment of Payable Tax up to a maximum of 300%, under the following:
   • Where the settlement of Payable Tax is late, 2% of the unpaid tax shall be due on the day following the due date of payment.
   • On the unpaid Tax amount to date, a 4% monthly penalty is due after one month from the due date of payment, and on the same date monthly thereafter.

2. For this penalty, the due date of payment in the case of the Voluntary Disclosure and Tax Assessment will be as per the following:

   • In the case of a Voluntary Disclosure, 20 business days from the date of submission.
   • In case of a Tax Assessment, you will have 20 business days from the date of receipt.

The submittal of an inaccurate Tax Return by the Registrant. *New mechanism

1. The fixed penalty will be applied: 1,000 for the first time. 2,000 in case of repetition.
2. As an exception to Clause 1 of this penalty, if the inaccurate Tax Return results in a Tax difference less than the fixed penalty listed in Clause 1 of this penalty, a penalty equivalent to the Tax difference of at least 500 shall be imposed.
3. Anyone correcting their Tax Return before the due date of payment will be rejected from the penalty imposed under Clauses 1 and 2 of this penalty.

The submittal of a Voluntary Disclosure by the Person/Taxpayer on mistakes in the Tax Return, Tax Assessment, or refund application under Article 10(1) and 10(2) of the Tax Procedures Law. *New mechanism

Without prejudice to the potential consequences of the penalty mentioned in Clause 10 of this Table, a percentage-based penalty shall be applied on the difference between the Tax that was calculated and that which should have been determined, under the following:

1. 5% on the difference, where the Voluntary Disclosure is submitted within one year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application;
2. 10% on the difference, where the Voluntary Disclosure is submitted within the second year following the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application;
3. 20% on the distinction, where the Voluntary Disclosure is submitted within the third year following the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application;
4. 30% on the distinction, where the Voluntary Disclosure is submitted within the fourth year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application;
5. 40 percent on the difference, where the Voluntary Disclosure is submitted after the fourth year from the due date of submission of the Tax Return, the Tax Assessment, or the relevant refund application.

The failure of the Person/Taxpayer to voluntarily disclose an error in the Tax Return, Tax Assessment, or refund application according to Article 10 (1) and 10(2) of the Tax Procedures Law before being informed by the Authority that it will be subject to a Tax Audit. *New mechanism

Without prejudice to the potential consequences of the penalty referenced in Clause 10 of this Table, the person will be subject to:

1. A penalty of 50% on the amount of error.
2. A penalty of 4 percent for every month or part of the month, of the following:
   1. The unpaid Tax to the Authority, from the date the payment is due for the applicable Tax Period until the date of receipt of the Tax Assessment.
   2. The Tax that was not returned to the Authority because of ineligible refund, from the date of Tax refund until the date of receipt of the Tax Assessment.

The Registrant's failure to calculate Tax on behalf of another person where the Registrant Taxable Person is obliged to do so under the Tax Law. *New mechanism

1. The Registrant shall be obliged to pay the penalty applicable to the late settlement of Payable Tax up to a maximum of 300%, under the following:
   1. here the settlement of Payable Tax is late, 2% of the unpaid tax is due on the day following the due date of payment.
   2. 4% monthly penalty is due following one month from the due date of payment, and on the same date monthly thereafter, on the unsettled Tax amount to date.
2. For this penalty, the due date of payment in the case of Voluntary Disclosure and Tax Assessment will be as per the following:
   1. In the case of a Voluntary Disclosure, 20 business days from the date of submission.
   2. In case of a Tax Assessment, you will have 20 business days from the date of receipt.